How I Did It: R. Donahue Peebles
R. Donahue Peebles built the largest African American-owned real estate development firm in the U.S. by mastering the art of taking risk -- but not too much risk.
Published March 2005
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COMMENT ON THIS ARTICLEAs told to John Fried
In the early '90s, R. Donahue Peebles was a powerful player in real estate development in Washington, D.C., but hardly a national figure. Then, on a family vacation in Miami, he decided to bid on the redevelopment of the grand but tired Royal Palms, a 417-room resort at the end of South Beach's wealthy Ocean Drive. It was an arduous project that would take six years to complete, but it was also one in which Peebles would break new ground -- the Royal Palm Crowne Plaza became the first African American-owned resort in the U.S. It's now the second largest hotel on South Beach and brought in $16.4 million in revenue in 2003. Equally important, the project solidified Peebles's reputation as an aggressive and politically savvy businessman and one of the most powerful players in the ranks of South Florida developers.
Today, Peebles's Atlantic Development Corp. is the largest African American-owned development firm in the U.S., with real estate holdings valued at approximately $500 million. His Residences at the Bath Club, a condo project that has transformed the oldest social club on Miami Beach's Millionaire's Row, is set to open this month, offering 112 units valued at up to $10 million each. He's also negotiating new projects in Las Vegas and the San Francisco Bay area.
I was inducted into the real estate business as a child. My mother was a secretary, but she went to night school to get her brokerage license and worked as a sales agent. Later, she opened her own real estate brokerage firm. During the summer of my senior year of high school, I worked with her appraising homes, learning the business. I also worked on Capitol Hill as a page and as an intern for two congressmen, Rep. John Conyers of Michigan and Rep. Ron Dellums of California. I had a pretty grueling schedule, but I got to see how politics and business interacted.
Going to college was a letdown for me. I went to Rutgers for a year because I wanted to be a physician. I wanted to help people and make a nice living, but I had already been working for years, making money. Real estate had low barriers of entry, so I left college after one year and took courses on appraising and real estate transactions. In 1979, I worked as a sales agent and appraiser at a particularly sluggish time in real estate -- interests rates were around 18% -- but I was getting experience.
I developed some relationships working on Capitol Hill that I maintained as I went into the business world. In 1982, there was an opening on the city property tax appeal board, an influential group that reviewed assessment values of D.C. real estate and had the authority to give out $50 million to $60 million in tax rebates annually. I knew Marion Barry, then mayor of Washington, D.C., who got me the opportunity to submit my qualifications to the board. I was appointed when I was 23. It gave me the kind of knowledge that would have taken years to acquire in the private sector. By the time I was 24, I was chairman of the board.
A real estate broker I knew from the tax appeal board told me about a client who had a property in Anacostia, a depressed commercial district in D.C. The client and developer were unable to agree on a price. The seller wanted $900,000; the developer was willing to pay $750,000. I had been working on another project that hadn't gotten off the ground, but I thought my investors might be interested in Anacostia. This led to the purchase of my first building, a 100,000-square-foot property.
